CARMELITA PELAEZ SAHAGUN, PETITIONER, VS. COURT OF APPEALS, JUDGE JOB B. MADAYAG, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 145, REGIONAL TRIAL COURT OF MAKATI, AND FILINVEST…

The case at bar commenced on June 25, 1982 when Civil Case No.
46556^[1]
was filed in the defunct Court of First Instance of Rizal, Branch XXIV,^[2]
by private respondent Filinvest Credit Corporation (hereinafter, Filinvest)
against petitioner’s spouse, Abel
(alias Abelardo) Sahagun, manager of Rallye Motor Co., Inc. (Rallye, for
brevity).  It was alleged that Abel
Sahagun made it appear that his company had sold a motor vehicle to one Ernesto
Salazar who issued a promissory note for the price and executed as security for
the payment of the note a chattel mortgage on the motor vehicle in favor of
Rallye.  Subsequently, Rallye, through
said Abel Sahagun, assigned the note and the chattel mortgage to Filinvest for
valuable consideration.  When the note
matured, Salazar failed to pay the value thereof to the assignee, respondent
Filinvest, compelling it to sue. 
However, Filinvest discovered later that the mortgaged car had not been
delivered to Salazar by Sahagun.^[3]

After Filinvest brought suit against Abel Sahagun, a writ of
attachment was issued and subsequently levied on the house and lot^[4]
registered in his name, located at No. 16 Mangga
Chupoy St., Pilar Village Subdivision, Las Piñas,
Metro Manila.  Petitioner and her
children have been residing continuously
in that house since then and up to now and she claims that house as her own,
having allegedly paid for it with her own earnings.

On June 2, 1983, the trial court issued an order denying private
respondent’s motion to declare defendant Abel Sahagun in default but directed
it to “take steps to effect service of the summons and complaint upon
defendant, who is out of this country and his whereabouts in the United States
of America is unknown, as per
information from his wife contained in her motion for intervention, pursuant to
Sec. 17, Rule 14, Rules of Court.”^[5] However, on June 23, 1983, the trial court dismissed without prejudice
the complaint of Filinvest for its failure to serve summons extraterritorially
upon defendant Abel Sahagun despite the aforesaid order.^[6]

Filinvest filed a motion for reconsideration,^[7] dated June 23, 1983, praying that the order of June 2, 1983 be reconsidered and set
aside and that defendant Abel Sahagun be declared in default.  It also prayed that the order granting
petitioner’s motion for leave to intervene
be denied, and that said motion be expunged from the records.

On July 7, 1983,
the trial court issued an order granting petitioner time to file a complaint in
intervention and denying reconsideration of the denial of private respondent’s
motion to declare defendant Abel Sahagun in default.^[8]

Petitioner Carmelita Sahagun, intervened^[9]
on July 27, 1983,
questioning the jurisdiction of the trial court.  However, for failure to appear at the
pre-trial conference held on November
25, 1983, she was declared “in default.”  Abel Sahagun was also declared in default for
failing to answer the complaint.^[10]
Subsequently, on February 20, 1984
the court a quo rendered judgment against Abel Sahagun, with the
following decretal portion:

“WHEREFORE, judgment is rendered in favor of the plaintiff and
against the defendant Abel Sahagun, ordering the latter to pay the former the
sum of NINETY-SEVEN THOUSAND SIXTY-SIX PESOS AND FIFTY-NINE CENTAVOS
(P97,066.59),  Philippine Currency, with
interest at the rate of 14% per annum from July 27, 1977 until fully paid; the
sum equivalent to 25% of the principal obligation due as and for liquidated
damages; the further sum equivalent to 25% of the obligation due as and for
attorney’s fees; and to pay the costs of this suit.

“SO ORDERED.”^[11]

Thereupon, petitioner Carmelita Sahagun, elevated the case to the
then Intermediate Appellate Court in AC-G.R. SP No. 05044 which, in a decision^[12]
promulgated on February 27, 1985,
granted her petition for certiorari with prohibition and set aside the
trial court’s aforesaid decision and the order, dated November 28, 1984,
granting execution.  The appellate court
ruled that petitioner was deprived of the opportunity to present evidence in
support of her complaint in intervention including evidence to support her
claim that since 1970 she and her
husband had been living separately.

In turn, Filinvest filed with the Court in G.R. No. 70357 a
petition for review of the Intermediate Appellate Court’s decision, but said
petition was denied in our resolution of July 8, 1985.^[13]

On September 26, 1985,
Filinvest filed a motion for leave to serve summons by publication on defendant
Abel Sahagun.  The court below granted
the motion, stating in its order dated November
15, 1985, as follows:

“x x x pursuant to Sec. 17, Rule 14 of the Revised Rules of
Court, let service of the summons upon defendant Abel (Abelardo) Sahagun be
effected out of the Philippines by publication in a newspaper of general
circulation in the Philippines, to which this matter may be assigned after due
raffle in accordance with existing law, for three successive days; and said
defendant is hereby ordered to file his answer in Court within a reasonable
time, which shall not be less than sixty (60) days after notice.

“The Clerk of Court is hereby directed to send copies of the
summons and this Order by registered mail with registry return card to the last
known address of said defendant at No. 16 Mangga Chupoy Street, Pilar Village
Subdivision, Las Piñas, Metro Manila.

“Plaintiff is hereby ordered to implead Rallye Motors Co.,
Inc. as co-defendant, within one (1) month from notice hereof.

“SO ORDERED.”^[14]

On December 11, 1985,
Filinvest filed an amended complaint for the same sum of money against Abel
Sahagun, this time impleading Carmelita Pelaez Sahagun and Rallye as additional
defendants.^[15]

On January 10, 1986,
the respondent trial court issued an order admitting the amended complaint and
directing service of summons and the amended complaint upon defendant Abel Sahagun at a different address —
“at his last known address at 1228-A Antipolo Street, Makati, Metro Manila.”^[16]

Afterwards, summons was supposedly served on Abel Sahagun through
publication in the Manila Evening Post on March 7, 14, and 21, 1986, according
to the affidavit of publication of its
president,^[17] with a confusing entry in the notice of
order^[18] that his last known address was at “No.
16 Mangga Chupoy, Pilar Village Subdivision, Las Piñas, Metro Manila” and
to which address said notice was directed, thus clearly contradicting
the address stated in the January 10, 1986 order of the trial court, which was
“No. 1228-A Antipolo Street, Makati, Metro Manila.”

On March 11, 1986,
petitioner filed her answer to the amended complaint.^[19]
Since no answer was filed by the two other defendants Abel Sahagun and Rallye,
Filinvest filed an omnibus motion^[20]
on June 26, 1986 that they
be declared in default.

On July 18, 1986,
Judge Job Madayag of Branch 145, Regional Trial Court of Makati, issued an
order granting in part the omnibus motion of Filinvest dated June 26, 1986, and denying it in
part.^[21]
Apparently, since only defendants Abel
and Carmelita Sahagun were allegedly served with summons, the former through
publication and the latter by personal service as in fact she had filed her answer, only defendant Abel Sahagun was declared
in default for failure to file his answer. 
Defendant Rallye, on the other hand, was not declared in default because
summons had not been served upon it.

Petitioner went on certiorari to the Court of Appeals, in
a petition docketed as CA-G.R.
SP. No. 09909, assailing as grave abuse of discretion the declaration of
default of defendant Abel Sahagun.  On February 6, 1987, respondent Court of
Appeals promulgated a decision dismissing the petition, and on April 22, 1987, it denied the
subsequent motion for reconsideration for lack of merit.^[22]
Hence, the present recourse.

Petitioner assails the appellate court’s decision and resolution,
raising the basic issue as to whether or not respondent trial court acquired
jurisdiction over defendant Abelardo Sahagun, by the publication of summons in
the Manila Evening Post (Annexes “G” and “G-1” thereof), so as
to empower it to declare him in default for failure to file his answer (Annex “H”
thereof).^[23]

There is no question that the facts of the present case warrant
extraterritorial service of summons as authorized by Section 17, Rule 14 of the
Rules of Court.  Admittedly, one of the
defendants, Abel Sahagun, has left the Philippines
and has been residing somewhere in the United
States. 
Per the certification of the
Commission on Immigration and Deportation dated July 22, 1983.  Abel
Sahagun left on April 23, 1978,^[24] hence he was a nonresident defendant at the
time private respondent brought suit in the court below.  Also, since the suit involves real property
wherein said defendant ostensibly has an interest and which property has in
fact been attached at the instance of private respondent, the court a quo
correctly ordered service of summons on said defendant out of the Philippines,
adopting for such service one of the modes authorized by the aforecited
provision of the Rules, that is, “by publication in a newspaper of general
circulation in such places and for such time as the court may order.”

It was posited during the deliberations on this case that such
publication of summons in a local newspaper, as sanctioned by the trial court,
was wrong and that the publication should have been made in a newspaper
published in the state and county of the United
States where Abel Sahagun now allegedly
resides.  Such publication in a foreign
newspaper, it is claimed, would most likely give notice to the person to be
served, although it is also conceded that such
condition has not been
incorporated in Section 17 of Rule 14. 
We believe, however, that such a sweeping doctrine would virtually
unsettle a long standing interpretation of the aforesaid rule on
extraterritorial service of summons by publication, as well as its
implementation sanctioned by the practice followed in this jurisdiction.

 True it is that there is
no specific proscription against resorting to publication of summons in a
foreign publication circulating in the place where the defendant resides.  To illustrate, in Tolaram Menghra
vs. Bulchand Tarachand, et al.^[25] it is reported that the summons therein was
served by publication in the territory of Hawaii where the defendant resided.  However, as early as the case of El Banco
Español-Filipino vs. Palanca, etc.^[26] where the defendant mortgagor had returned
to the City of Amoy, China and was residing therein when the foreclosure suit
was instituted against him, the lower court ordered the publication of summons
in a newspaper in the City of Manila, and the service of a copy thereof to the
last known address of defendant in accordance with the provisions of Sections
398 and 399 of the Code of Civil Procedure, which provisions have been
reproduced in the aforestated Section 17, Rule 14 of the 1964 Rules of Court.

While what was involved in the aforesaid case was a foreclosure
proceeding and the present case is based on the attachment of defendant’s
property here, the difference is inconsequential.  In both cases, the actions are quasi in
rem^[27]
since, in the language of El Banco Español-Filipino, there
is an instructive analogy between foreclosure and attachment proceedings.  In both instances, summons by publication is allowed and the rationale for
that is explained in said case thus:

“Passing at once to the requisite that the defendant shall
have an opportunity to be heard, we observe that in a foreclosure case some
notification of the proceedings to the non-resident owner, prescribing the time
within which appearance must be made, is everywhere recognized as essential.  To answer this necessity the statutes
generally provide for publication, and usually in addition thereto, for the
mailing of notice to the defendant, if his residence is known.  Though commonly called constructive, or
substituted service, such notification does not constitute a service of process
in any true sense.  It is merely a means
provided by law whereby the owner may be admonished that his property is the
subject of judicial proceedings and that it is incumbent upon him to take such
steps as he sees fit to protect it.  x x x

x x x

“It will be
observed that this mode of notification does not involve any absolute assurance
that the absent owner shall thereby receive actual notice.  The periodical containing the publication may
never come to his hands, and the chances that he should discover the notice may often be very slight.  Even where notice is sent by mail the
probability of his receiving it, though much increased, is dependent upon the
correctness of the address to which it is forwarded as well as upon the regularity
and security of the mail service.  It
will be noted, furthermore, that the provision of our law relative to the
mailing of notice does not absolutely require the mailing of notice
unconditionally and in every event, but only in the case where the defendant’s
residence is known.  In the light of all
these facts, it is evident that actual notice to the defendant in cases of this kind is not, under the
law, to be considered absolutely necessary.”

In De Midgely vs. Ferandos, etc.,
et al.,^[28]
we adverted to the disquisition in Perkins vs. Dizon, etc.,
et al.^[29] in this wise:

“This Court clarified that in a quasi in rem
action jurisdiction over the person of a nonresident defendant is not
essential.  The service of summons by
publication is required ‘merely to satisfy the constitutional requirement of
due process’.  The judgment of the court
in the case would settle the title to the shares of stock and to that extent it
partakes of the nature of a judgment in rem.  Consequently, the lower court had
jurisdiction to try the case even if it had not acquired jurisdiction over the
person of Idonah Slade Perkins.  The
judgment would be confined to the res. 
No personal judgment could be rendered against the nonresident.”

What further compounds the difficulty in the proposed requirement
for foreign publication of the summons in the case at bar is the fact that it
does not appear in what state or county of the United States the defendant Abel
Sahagun presently resides.  Necessarily,
if the trial court should be required to resort to publication in a foreign
newspaper it must have at hand not only the name and availability of such
newspaper or periodical but also the laws and rules governing the publication
of judicial processes and notices in said place.  Here, we only have a defendant in the United States to contend with, but we can very well
anticipate the plethora of problems that would arise if the same question on
nonresident defendants is replicated in the other countries of the world.  In
this jurisdiction, at least, we have the corresponding regulatory guidelines in
Presidential Decree No. 1079.

In fine, while there is no prohibition against availing of a
foreign newspaper in extraterritorial service of summons, neither should such
publication in a local newspaper of general circulation be altogether
interdicted since, after all, the rule specifically authorizes the same to be
made in such places and for such time as the court concerned may order.  If it is felt that adjective policy would be
better served by denying such discretion to the trial court, then the
corresponding amendment of the present rule would be indicated but subject to
empirical proof of the necessity for and the wisdom of such a change.

Accordingly, for the nonce, the matter should continue to be
addressed to the sound discretion of the trial court in each particular case
since it has the facts before it, and we should interfere only in the exercise of our corrective power
over an error or abuse in its actuations in a specific case.  Undeniably, some controversies may present
factual features which would justify resort to local publication of
summons.  There is the possibility of
debtors escaping the jurisdiction of our courts through the simple expedient of
seeking a foreign refuge, probably with their unknown subsequent whereabouts
unknown or unascertainable.  For that
matter, it is on that very rationale that summons by publication is authorized
whenever the address of a defendant is unknown and cannot be ascertained by diligent
inquiry even if he is in the Philippines.

We repeat, service of summons on a nonresident defendant who is not found in the country is required, not for
purposes of physically acquiring jurisdiction over his person but simply in
pursuance of the requirements of fair play, so that he may be informed of the
pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to
a judgment in favor of a resident, and that he may thereby be accorded an
opportunity to defend in the action, if he be so minded.  The only relief that may be granted in such
an action against such a nonresident defendant, who does not choose to submit
himself to the jurisdiction of the Philippine court, is limited to the res.

However, despite our holding that publication in the Philippines
is sufficient, the service of summons in this case is still defective, there
being no showing that copies of the summons and the amended complaint were duly
served at the defendant’s last known correct address by registered mail, as a complement to the publication^[30] and in compliance with the order of the
lower court dated January 10, 1986,^[31] as hereinbefore noted.  The failure to strictly comply correctly with
the requirements of the rules regarding the mailing of copies of the summons
and the order for its publication is a fatal defect in the service of summons.^[32] As held by this Court:

“It is the duty of the court to require the fullest compliance
with all the requirements of the statute permitting service by
publication.  Where service is obtained
by publication, the entire proceeding should be closely scrutinized by the
courts and a strict compliance with every condition of law should be exacted.  Otherwise great abuses may occur, and the
rights of persons and property may be made to depend upon the elastic
conscience of interested parties rather than enlightened judgment of the court
or judge.”^[33]

The foregoing notwithstanding, we are not inclined to order the
dismissal of the case below for non-compliance by private respondent of the
trial court’s order of January 10,
1986.  The attachment of
property registered in the name of defendant Abel Sahagun justifies summons by
publication and, although that ownership appears to be disputed and should
precisely be a priority concern of the trial court to resolve, nonetheless a prima facie justification for extraterritorial service of
summons on said nonresident defendant clearly exists.  The erroneous transmission of copies of the
summons and the complaint to what appears as an incorrect last known address of said defendant is a matter which
the trial court can more readily ascertain and remedy.

It also bears mention that even if said nonresident defendant
should ultimately be declared in default, his interest can be duly represented
by the non-defaulting defendant since a common cause of action appears to be
involved, which fact may be more adequately determined at the trial, and the
success of the latter in the suit shall inure to the benefit of the former.^[34]

WHEREFORE, the petition is GRANTED and the decision, dated February 6, 1987, and the resolution,
dated April 22, 1987, of
respondent Court of Appeals are SET
ASIDE.  The case is, however, REMANDED to the lower
court for proper extraterritorial service of summons to defendant Abel Sahagun
in accordance with the provisions of Section 17, Rule 14 of the Rules of Court
consonant with our above pronouncements, and for appropriate proceedings in
accordance with our observations in this decision and the courses of action indicated therein.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz,
Feliciano, Gancayco, Bidin, Griño-Aquino, Medialdea, and Davide, Jr., JJ., concur.

Sarmiento, J., see concurring
and dissenting opinion.

Paras and Padilla, JJ., no part.

^[1]
Petition, Annex A; Rollo, 25.

^[2]
This case was later given a new docket number, Civil Case No. 3161, and
assigned to Branch 145.  Regional Trial Court of Makati, Metro Manila
(Original Record, 56).

^[3]
Petition, Annex A; Rollo, 25-26.

^[4]
Id.; ibid.,
43.

^[5]
Id., Annex B; ibid., 39.

^[6]
Id., Annex B-1; ibid., 40.

^[7]
Original Record, 66.

^[8]
Id., Annex B-2; ibid., 41.

^[9]
Id., Annex C; ibid., 42.

^[10]
Original Record, 120.

^[11]
Ibid., 138.

^[12]
Penned by Associate Justice Vicente V. Mendoza, and concurred in by Associate
Justices Edgardo L. Paras and Luis A. Javellana.

^[13]
Petition, Annex D-2; Rollo, 53.

^[14]
Id., Annex E; ibid., 54.

^[15]
Id., 6; ibid., 8.

^[16]
Id., Annex F; ibid., 55:  Original Record,
299.

^[17]
Id., Annexes G and
G-1; ibid., 56.

^[18]
Id., Annex G-1; ibid., id.

^[19]
Rollo, 8; Original Record, 311-317

^[20]
Ibid., 9; Original Record, 349-350.

^[21]
Original Record, 358.

^[22]
Both penned by Justice Felipe B. Kalalo, with the concurrence of Associate
Justices Floreliana Castro-Bartolome and Esteban M. Lising.

^[23]
Petition, 2-3; ibid., 4-5.

^[24]
Id., Annex C-1; Rollo,
44.

^[25]
67 Phil. 286 (1939).

^[26]
37 Phil. 921 (1918).

^[27]
See Citizens’ Surety & Insurance Company, Inc. vs. Melencio-Herrera,
et al., 38 SCRA 369 (1971).

^[28]
64 SCRA 23 (1975).

^[29]
69 Phil. 186 (1939).

^[30]
Sec. 17, Rule 14, Rules of Court.

^[31]
Rollo, 55.

^[32]
See Dy Reyes, et al. vs. Ortega, et al., 16 SCRA 903 (1966).

^[33]
Dulap, et al. vs. Court of Appeals, et al. 42 SCRA 537 (1971), citing
Bachrach Garage and Taxicab Co. vs. Hotchkiss & Co., 34 Phil. 506
(1916).

^[34]
Sec. 4, Rule 18, Rules of Court; Bringas, etc. vs. Hernando, et al., 144
SCRA 346 (1986).

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